Correlation Between New Mountain and Great Elm
Can any of the company-specific risk be diversified away by investing in both New Mountain and Great Elm at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining New Mountain and Great Elm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Mountain Finance and Great Elm Group, you can compare the effects of market volatilities on New Mountain and Great Elm and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in New Mountain with a short position of Great Elm. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Mountain and Great Elm.
Diversification Opportunities for New Mountain and Great Elm
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between New and Great is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding New Mountain Finance and Great Elm Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Elm Group and New Mountain is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on New Mountain Finance are associated (or correlated) with Great Elm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Elm Group has no effect on the direction of New Mountain i.e., New Mountain and Great Elm go up and down completely randomly.
Pair Corralation between New Mountain and Great Elm
Given the investment horizon of 90 days New Mountain Finance is expected to generate 0.9 times more return on investment than Great Elm. However, New Mountain Finance is 1.11 times less risky than Great Elm. It trades about 0.16 of its potential returns per unit of risk. Great Elm Group is currently generating about 0.01 per unit of risk. If you would invest 1,143 in New Mountain Finance on September 1, 2024 and sell it today you would earn a total of 51.00 from holding New Mountain Finance or generate 4.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Mountain Finance vs. Great Elm Group
Performance |
| Timeline |
| New Mountain Finance |
| Great Elm Group |
New Mountain and Great Elm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Mountain and Great Elm
The main advantage of trading using opposite New Mountain and Great Elm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Mountain position performs unexpectedly, Great Elm can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Great Elm will offset losses from the drop in Great Elm's long position.| New Mountain vs. BlackRock TCP Capital | New Mountain vs. Carlyle Secured Lending | New Mountain vs. Sixth Street Specialty | New Mountain vs. WhiteHorse Finance |
| Great Elm vs. Investcorp Credit Management | Great Elm vs. Monroe Capital Corp | Great Elm vs. Allianzgi Convertible Income | Great Elm vs. John Hancock Income |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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